NEW DELHI: THE Ministry of External Affairs is justifiably proud of the spectacular execution of the ASEAN-India Commemorative Summit, which ended with all 10 ASEAN heads of state attending as chief guests of the Republic Day parade on January 26.
The ASEAN summit marks a quarter century of diplomatic relations between India and the 10-member Association of South East Asian Nations, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The Delhi declaration released after the summit in New Delhi called for the strengthening of ASEAN-India Strategic Partnership for mutual benefit, across the whole spectrum of political-security, economic, socio-cultural and development cooperation.
In a first, the declaration also invoked the “cross-border movement of terrorists” and agreed to fight this with “close cooperation”. They agreed on a comprehensive approach to counter “foreign terrorist fighters”.
“Combating terror financing jointly is another important area where we could work collectively,” PM Narendra Modi told the visiting ASEAN leaders. While this endorses New Delhi’s long standing position on terrorist infiltration from Pakistan, several ASEAN nations including the Philippines, Thailand and Indonesia face similar issues.
And in language guaranteed to spark protests from China, Modi also declared that “India shares ASEAN’s vision for peace and prosperity through a rules-based order for the oceans and seas. Respect for international law, notably UNCLOS (United Nations Convention on the Law of the Sea), is critical for this.”
However, beneath all this goodwill there are certain issues that remain stumbling blocks in the ties, mostly to do with trade, which remain much lower than the potential. Despite a Free Trade Agreement (FTA) in effect since 2015, ASEAN-India trade stood at $71 billion in 2016-2017, barely 10.85 per cent of India’s external trade. And while ASEAN nations are keen to get India to sign on to the Regional Comprehensive Economic Partnership (RCEP), India has reservations because it clashes with its ‘Make in India’ programme.
The RCEP is a proposed free trade agreement between ASEAN and six states — Australia, China, India, Japan, South Korea and New Zealand. In the 19th round of RCEP last year, India said it would not agree to “market access and national treatment (equal treatment of foreign and local firms).” But, it agreed to ensure transparency and cooperation in government procurement matters (including information exchange and sharing of knowledge) as part of the agreement.
Remarking on a Parliamentary Standing Committee on Commerce panel report on ‘Trade with Association of South East Asian Nations’, foreign secretary S Jaishankar said it “called for observance of due restraint and not conclude trade arrangements that are not to our medium term advantage... a lot of our (free trade) agreements have not served as well as they could have.”
As for connectivity, the India-Myanmar-Thailand Trilateral Highway remains plagued by environmental and land-related issues, despite the assertion of Union Minister for Road Transport & Highways Nitin Gadkari that the route would be operational by December 2019. The 1,400 km long highway proposes to turn India’s northeast into a gateway into Southeast Asia.
He also said India had proposed a $1 billion line of credit to promote sea, air and road connectivity with ASEAN, as well as a project development fund of $77 million to develop manufacturing hubs in Cambodia, Laos, Myanmar and Vietnam.
At the Summit plenary, Singapore PM Lee Hsien Loong noted that RCEP represents an opportunity to establish the world’s largest trade bloc.“It could potentially transform the entire East Asian region into a single market.” But while the “desire to make it happen is there,” there was still a need by the countries involved to close “the gaps in perspectives and expectations.”
India-ASEAN trade value in 2014-15
China-ASEAN trade value in 2016
Indian investments in ASEAN region in 2015-2016
Chinese investment in 2015-16
India has an insignificant presence in ASEAN’s top 10 imports, wherein ASEAN imported around $11.8 billion valued imports from India, accounting for a share of 1.57 per cent of overall imports of $752.35 billion from the world during 2016. A study revelaed that the primary reason for growing trade deficit between India and ASEAN has been the design of the trade relationship between the two groups.